USD/JPY bears stay in control in Tokyo for fresh 6-week low

• USD/JPY break to fresh lows in Tokyo  as the greenback stays out of favour.
• Bank of Japan will consider slashing this fiscal year’s inflation forecast in quarterly forecasts.

USD/JPY is trading at 108.03 at the time of writing, down some 0.1% in a downside extension of the overnight rout in the greenback for a six week low.

Despite the stabilisation in US yields, the US dollar was sold off heavily in European trade.

The DXY ended lower by nearly 0.6% in a slide from 91.7460 to a fresh six-week low of 91.0340.

US treasuries yields were slightly higher as investors considered the impacts of last week’s rally.

The 2-year government bond yields remained at 0.16%, and 10-year government bond yields climbed  to 1.60%.

Improved risk sentiment last week as shown by the rally in global stocks to record highs has continued to weigh on both the greenback.

Markets are in a period of consolidation ahead of the Federal Reserve during the media blackout period which might help to explain the disjointed intermarket associations at the start of the week as investors reshuffle their portfolios.  

BoJ noise

Meanwhile, which is slightly yen negative, ”the Bank of Japan will consider slashing this fiscal year’s inflation forecast in quarterly forecasts due out at its policy meeting on April 26-27, the Nikkei newspaper reported on Tuesday,” Reuters reported.

”The downgrade will reflect the impact of cuts in cellphone charge fees, which analysts say could push down core consumer inflation by around 0.2 percentage point.

The central bank is also seen projecting inflation to hover around 1% in fiscal 2023, the paper said without citing sources.

The BOJ currently expects core consumer prices to rise 0.5% in the year that began in April.”